THE UK manufacturing sector moved ahead at its fastest pace in nearly a decade last month, figures have shown.

Despite the impact of higher oil prices, strong demand both at home and abroad led to a marked improvement in industry conditions.

The closely-watched Chartered Institute of Purchasing and Supply's (CIPS) Purchasing Managers' Index, which draws on a number of indices to measure overall activity, stood at 56.3, with anything above 50 representing growth.

The figure, which compared with a revised figure of 55.0 for June, was the highest since October 1994.

Experts said the figures would further increase the likelihood of an already widely-expected rise in interest rates this week.

Economist Philip Shaw, of Investec, said: "The tone of the report shows not only is the sector recovering, it is also sizzling away.

"Overall, the tone of the report makes some very cheerful reading for manufacturers."

The figures backed up last month's official data, which revealed that the sector expanded by 0.5 per cent between April and May.

The CIPS report reflected continued growth in output and new orders within the manufacturing sector.

The index for output accelerated to 59.5 against a revised level of 57.9 for June, while the new orders index rose to 58.1.

High oil prices pushed up the cost of materials such as plastic and chemical products, and contributed to a rise in input prices for the 11th month running.

The pace of growth was driven by strong domestic and international demand.

Roy Aycliffe, director of professional practice at CIPS, said: "Despite rising costs, firms stepped up their purchase of raw materials to meet increasing demand and guard against future supply shortages."

The report also showed an increase in manufacturing staff for the fourth successive month. Manufacturers said this rise was necessary to help support growth in output and new business.